Newspaper article The Christian Science Monitor

Individual Soviet Republics Wrangle with West over Aid

Newspaper article The Christian Science Monitor

Individual Soviet Republics Wrangle with West over Aid

Article excerpt

THE Soviet Union is bankrupt, and the fractious state of the 12 former Soviet republics is frustrating Western creditors and aid donors.

Deputy finance ministers of the Group of Seven (G-7) leading industrial nations sat down Nov. 18 for three days of talks with representatives of the republics to try to settle the Soviet debt crisis. According to various reports, the G-7 arrived with a proposal to defer payments on the debt and to offer some new credits. But the package depends on the Soviet republics implementing a memorandum signed last month to take joint responsibility for the estimated $70 billion Soviet debt.

According to the independent Soviet news agency Interfax, 10 of the republics signed a further agreement Nov. 19 on collective responsibility. The Ukrainian representative signed with the condition that his signature be confirmed in a week. During that time the republics must define their exact shares of the debt and of Soviet assets.

Uzbekistan refused to sign the document at all, insisting that it would not take responsibility for other republics' share of the debt. The Uzbeks, who produce about a quarter of Soviet gold, say only three or four republics are capable of earning money to pay the debt. They also accused the G-7 of imposing unreasonable conditions on the republics.

"They want to resolve the question in the form of an ultimatum - first sign the memorandum and then we'll talk about credits," Uzbek Vice President Shukurulla Mirsaidov told Interfax.

"There is no ultimatum at all," Canadian Deputy Finance Minister David Dodge responded, according to a Reuters report.

The insistence on republican unity "is unrealistic," says the head of the Moscow office of one leading Western bank. If they stick to that condition and do not offer some new loans, "the G-7 is going to go home empty handed," the banker says. He warns that the State Bank for Foreign Trade, the bank which is the agreed central manager for debt payments, is already freezing accounts of foreign clients, blocking the transfer of money overseas.

"They're obviously running out of money," Mr. Dodge says.

"Deferral {of debt payments} is in everyone's best interest," US Ambassador Robert Strauss told US reporters Nov. …

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